Shares of Nucor ($NUE) and Steel Dynamics ($STLD) displayed mixed performance early Tuesday as both steel production companies released fourth-quarter profit forecasts that fell short of analyst expectations, largely attributable to declining prices. Nucor anticipates earnings to fall between $0.55 and $0.65 per share for the quarter ending December 31, as announced late Monday.
This forecast contrasts with the consensus among four analysts on FactSet, which projects a GAAP EPS of $0.70. In premarket trading, Nucor's stock declined by 1.6%. This guidance reflects a significant drop from the $1.05 earnings per share that Nucor reported in the third quarter and a sharp decrease from the $3.16 EPS recorded in the same quarter last year.
Earlier in October, Nucor had indicated that it expected a decrease in its fourth-quarter earnings compared to the previous quarter. The anticipated decline is due to lower average selling prices and reduced volumes in both the steel mills and products segments for the current quarter, as noted by Nucor.
However, the company expects profitability in its raw materials division to see an increase quarter over quarter, excluding an impairment charge taken in the prior three-month period. In a separate announcement, Steel Dynamics stated that it projects earnings per share to range from $1.26 to $1.30 for the fourth quarter, down from $2.05 in the last quarter and $2.61 from the same period last year.
Analysts surveyed by FactSet anticipate a GAAP EPS of $1.37. Initially, the stock of Steel Dynamics dipped in pre-market trading but later rebounded. Steel Dynamics attributed its tempered profitability expectations to reduced market prices, lower shipment levels, and a 50,000 ton-volume cut resulting from an unexpected outage at its Butler Flat Roll division.
Nevertheless, earnings from Steel Dynamics' metals recycling operations are expected to rise sequentially, while profits from its steel fabrication segment are set to decrease. Steel prices for flat rolled steel have shown signs of stabilization, with underlying demand remaining seasonally steady, driven by strong customer order activity, according to Steel Dynamics.
The firm mentioned that its customers have expressed a positive outlook for the business in the upcoming year. Steel Dynamics is scheduled to announce its fourth-quarter results after market close on January 22, while Nucor will disclose its earnings post-market on January 27..